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Warning that revised debt relief system will come at a cost

Warning that revised debt relief system will come at a cost

As from the 6th April, any business that hopes to avail the ‘time to pay’ scheme and defer a tax payment of over £1m, has to pay for an Independent Business Review (IBR) that will cost an average of £42,500.

HMRC has admitted that an IBR could be as costly as £75,000, which seems a lot for a company that is already struggling with their cash flow.

The ‘time to pay’ scheme was introduced as a measure to help businesses defer tax during the recession and was extended for a further 5 years in the last budget. Since its conception, £5bn has so far been deferred and many contractor accountants have already voiced their approval of the scheme.

The Independent Business Review is designed to help HMRC decide whether a company should qualify under the ‘time to pay’ scheme. HMRC hopes that by introducing this measure, companies that do not really need to defer their tax will be deterred from applying. The review is conducted by insolvency professionals and it is expected that around 250 businesses a year will need to provide one.

Amongst the items that can be included in an IBR are the annual and management accounts, cash flow forecasts, aged debtor and creditor lists, future trading projections and a detailed fixed assets register.

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Image: Lime by *clairity*

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